Here is an article by Chris Taylor at Reuters about investors who choose not to diversify and gamble heavily with their investments on one stock... unfortunately for me he of course found an investor who had the one stock I had to quote... Apple! If I knew I would be up against a successful Apple investor, I would have taken it easier on the Apple quotes!
My arguments for diversification for individuals can be best understood by looking at a real life example of why placing too much in any given company is gambling. Apple has been on a tear; but it faces the same risks as GM, Enron, etc. Diversification isn't a waste of time for individuals because unlike professional speculators and money managers who will do fine no matter what your investments do, individuals can not eat Apple gains.
And unlike those that bought in years ago, the expectations of the company to continue to perform at a very high level are already priced into today's stock.
My advice: it's best to keep your investments separate from your gambling, and don't confuse the two, or count on any one stock to payoff when you need it to.